Duration Dependence and Composition in Unemployment Skills

Labor markets have improved since the Great Recession, but
the average duration of unemployment, which is an indicator of labor market
health, remains high. In their
Review article “Duration
Dependence and Composition in Unemployment Spells,” James D. Eubanks and
David Wiczer set out to discover why this is happening. They focused on
explaining these two common theories:

Some workers are able to find jobs more quickly
because they have more-valuable skills or are more efficient at searching for
jobs.

Duration has a direct effect on the job-finding
rate. For example, a worker’s skills may deteriorate during unemployment or
employers may be reluctant to hire workers who’ve been unemployed for a long
time.

Eubanks and Wiczer found out a few things:

Workers who’ve been unemployed for a longer time
still find jobs more slowly than those who’ve been unemployed for a shorter
time, even when variables such as age, gender and occupation were removed.

·During the Great Recession, workers with the
slowest job-findings rates found jobs at slower rates than before the downturn;
but job-finding rates for workers with the fastest job-finding rates remained
constant.

The job-finding rate of the slowest job finders
has been slow to recover to its pre-recession level, resulting in the
still-high unemployment duration even as the labor market has recovered.